Nature Positive Role of the Offshore Wind Sector

The principle of “double materiality”, a concept at the heart of the EU’s CSRD, defines a company’s impact on the environment and its dependencies on it as highly interdependent (see Figure 7). In other words, the economic activities of businesses have impacts on both the environment and society (known as impact materiality), while concurrently, businesses also encounter risks (and opportunities) arising from their dependencies on the environment and society (known as financial materiality).2.1 Double materiality Double materiality FIGURE 7 Double materiality Traditional materiality Business impacts on nature/ impact materialityDependencies/ financial materiality Examples of financial materiality Pressure on water availability and decline in quality affect company profitability Soil erosion and degradation lead to decreases in agricultural yields for agricultural food companies Dirty beaches and coastal areas cause drop in tourism traffic and revenues – – –Examples of impact materiality Company activities affect water supply and quality Unsustainable agricultural practices lead to decrease in soil quality Irresponsible travel and tourism cause pollution and over-exploitation of natural resources – – –Business dependencies on nature/financial materiality Source: World Economic Forum. Definition of double materiality sourced from: Deloitte. (2023). Double Materiality: 5 challenging key aspects to consider. According to the World Economic Forum’s 2020 report Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy, half of the world’s gross domestic product (GDP) is moderately or highly dependent on nature.73 All economic sectors are dependent on nature, though the degree of dependency may vary (e.g. construction, agriculture, and food and beverages are the largest highly nature-dependent industries). Many industries have significant “hidden” nature- related dependencies in their supply chain. Like many other industries, offshore wind depends on a number of ecosystem services and environmental assets to function,74 including global climate regulation, flood and storm protection, and, to a certain extent, mass stabilization and erosion control. Offshore wind farms are susceptible to extreme weather events such as typhoons, which can force the shutdown of wind turbines, delay vessels and port services, and cause damage to power transmission systems.75 According to Allianz, cable damage or failure accounts for 53% of offshore wind losses by value in its main insurance markets.76 Offshore wind also depends on many environmental assets, and most of these dependencies are hidden in its supply chain. For instance, although wind power generation does not rely on water consumption, upstream supply chain players Nature Positive: Role of the Offshore Wind Sector 19